NSF Halts New Funding and Caps Indirect Rate Costs

President Donald Trump’s administration is making drastic budget cuts and ideologically driven priority changes at the National Science Foundation in the name of saving taxpayers money and rooting out diversity, equity and inclusion efforts. But higher education leaders warn the plans will sabotage the work of the independent 75-year-old federal agency, which sends billions to universities each year for nonmedical research.

A week after the NSF’s director—whom Trump appointed during his first term—resigned, Nature reported Friday that the federal agency told staffers on April 30 that it would “stop awarding all funding actions until further notice,” but provided no further explanation.

The NSF has also told staff to screen grant proposals for “topics or activities that may not be in alignment with agency priorities,” according to Nature, which viewed internal documents that have not yet been made public. If NSF employees find proposals that aren’t “in alignment,” they must return the applications to the applicant. The move is “butchering the gold standard merit review process that was established at NSF over decades,” one anonymous staffer told the publication. Another said the policy creates potential for “Orwellian overreach.”

These changes come after months of stalled grant reviews and about two weeks after the NSF canceled hundreds of grants that officials said no longer align with the agency’s priorities—including projects that promote diversity, equity and inclusion or combat misinformation. Early last week, the agency canceled another 700 grants. NPR also reported Friday that the NSF terminated an additional 344 already-approved grants that “were not aligned with agency priorities.”

But the NSF’s future could get even bleaker in the coming months.

On Friday, Trump proposed slashing the NSF’s budget by more than half—from $8.8 billion to $3.9 billion in the 2026 budget—as part of a broader plan to cut $163 billion in nondefense spending. That proposal, which also included some $18 billion in cuts to the National Institutes of Health, prompted condemnation from the academic community.

“Make no mistake: slashing NIH research by 40% will delay or deny life saving treatments for patients desperately waiting for cures. Halving NSF-funded research will sideline researchers racing toward new discoveries in frontier fields such as biotechnology, AI, advanced energy technology, and materials sciences,” Mark Becker, president of the Association of Public and Land-grant Universities, said in a statement Friday. “Congressional leadership is needed to reject misguided cuts to higher education and research, which are major drivers of American productivity, job creation, and innovation and instead redouble investment in widely recognized sources of American global economic leadership.”

Veena Dubal, a law professor at the University of California, Irvine, who specializes in technology and labor law, wrote on BlueSky that if Congress passes Trump’s budget cuts for the NIH and NSF, “There will be no coming back” and the repercussions will be “life destroying.”

Trump’s budget for the NSF would cut roughly $3.5 million from the agency’s general education and research budget, which he said covers such topics as “climate; clean energy; woke social, behavioral, and economic sciences; and programs in low priority areas of science.” But it would maintain current funding levels for artificial intelligence and quantum information sciences research.

However, the NSF has already terminated numerous grants related to AI and quantum computing, including a $1 million grant to the University of Virginia that was aimed at preparing youth for careers in AI through experiential learning.

Trump’s budget proposal would also cut another $1.1 million for the NSF’s Broadening Participation programs, which are designed to “encourage a wide variety of evidence-based approaches to build STEM education and research capacity, catalyze new areas of STEM research, and develop strategic partnerships and alliances,” according to the NSF website. But under Trump’s budget, all “DEI-related programs” at the NSF would be “eliminated.” It specifically cites past Broadening Participation projects, including those titled “Reimagining Educator Learning Pathways Through Storywork for Racial Equity in STEM,” and “Addressing White Supremacy in the STEM Profession,” as examples of the types of programs that will no longer receive federal dollars.

Lastly, the budget proposal calls for a $93 million cut to the NSF’s budget for agency operations and awards management, which the Trump team says “aligns with the agency’s reduced size.”

A letter to the Trump administration signed by about a dozen former NSF directors and National Science Board Chairs warned that the president’s avowed vision of securing America’s position “as the unrivaled world leader in critical and emerging technologies” cannot be achieved with his proposed funding cuts.

“Such a budget would thwart scientific progress, decimate the research workforce, and take a decade or more to recover,” reads the letter, which proposes a doubling of FY25 funding over the next few years. “We face a fork in the road. Do we want to win or concede the race for new knowledge and a competitive STEM workforce? For 75 years winning that race has been the foundation of American prosperity and national security. Adopting the proposed cuts would fast-track China’s plans for technological dominance.”

Capping Indirect Costs, Again

The agency also announced Friday that it’s capping indirect cost rates for grants and contracts awarded to higher education institutions at 15 percent, effective for any awards made on or after May 5, 2025. Historically, federal agencies have negotiated with colleges and universities to set tailored reimbursement rates for research costs that may support numerous projects, such as laboratory space, utilities and administrative personnel.

This is the third time in the last three months that the federal government has sought to cap reimbursements for costs indirectly related to research. Federal judges quickly blocked similar efforts at the National Institutes of Health and the Department of Energy after a coalition of academic associations sued, arguing the caps violated federal law and would hinder research. Unlike those proposals, the NSF cap will only apply to new grants, not existing ones.

“This change is intended to streamline funding practices, increase transparency, and ensure that more resources are directed toward direct scientific and engineering research activities,” NSF officials wrote in the policy notice.

But Matt Owens, president of COGR, which represents research institutions across the nation, called the plan a “disaster in the making for American science & technology and our nation’s continuing competitiveness” in a statement Friday. While COGR said it’s “committed to finding ways to get more for taxpayers’ research investments,” Americans “deserve better than a series of misguided policy proclamations that harm our nation’s research enterprise, economy, health, and security.”

Kara Freeman, president and CEO of the National Association of College and University Business Officers, similarly characterized the plan as “short-sighted and ultimately against the nation’s interests.”

“This retrenchment is not a good deal for taxpayers,” she said in a statement Friday. “The truth is that without a federal partner to share some of the costs of innovation, ground-breaking research, and other life-changing advances, these costs will fall directly and indirectly on current students or bring this vital work to a halt.”